Dan Neville (Limerick West, Fine Gael)
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Question 186: To ask the Minister for Agriculture and Food the steps she intends to take to protect Ireland's dairy industry; and if she will make a statement on the matter. [26188/05]

Dan Neville (Limerick West, Fine Gael)
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Question 209: To ask the Minister for Agriculture and Food the discussions she has had at EU level to protect dairy supports; and if she will make a statement on the matter. [26189/05]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 186 and 209 together.

The dairy industry continues to contribute very substantially to the national economy, with an output value of some €2.3 billion and exports of €1.86 billion last year. This year exports are again performing very well despite adjustments to market management supports brought about by the implementation of the Luxembourg Agreement on the reform of the CAP.

The Commission market management policy has been far too aggressive and I have consistently and resolutely challenged the Commissioner at every opportunity, including raising the matter at the Council of Ministers. As a consequence of enlisting the support of many other member states for my point of view I believe the Commission policy has moderated in recent times, now having closer regard to the market implications of its actions rather than its previous emphasis on budgetary policy.

While acknowledging that some adjustment in market management measures is warranted, indeed necessary, if the Luxembourg Agreement is to be implemented in full, my concern has been to ensure that the transition is implemented in a more measured way. Sustained downward pressure on market supports would effectively reduce our international competitiveness and put pressure on our ability to fully exploit opportunities to export milk products to international markets. A longer period in which to make the necessary adjustment will instead provide a more solid platform on which to build new market opportunities while consolidating our position in existing markets.

Mindful of the role exchange rates play in international price competitiveness I have asked the Commission to be particularly sensitive about how it implements market adjustments in reaction to currency fluctuations that may be susceptible to exceptional circumstances rather than reflecting otherwise normally stable economic indicators. The stability prevailing in producer prices over recent times is welcome and the direct payments, amounting to €120 million this year, rising to €180 million next year, as compensation for the reduction in institutional support prices should result in a higher return for dairy farmers this year and into the future. I will continue to exert every possible pressure on the EU Commission to ensure that in its management of the EU dairy regime, we achieve a satisfactory outcome for the Irish dairy industry in terms of enhanced industry competitiveness and stable farm incomes into the future.